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Start Ups

    The Good, The Bad & The Ugly

          @ProactivePaul

            9 Mar 2013

1
Socialism

         You have two cows.

    You give one to your neighbour.




2
Communism

         You have two cows.

    The government takes them both
        and gives you the milk.



3
Fascism

         You have two cows.

    The government takes them both
         and sells you the milk.



4
Capitalism

        You have two cows.

    You sell one and buy a bull.
     You retire happily on the
     earnings from your farm.

5
Venture Capitalism

     You have two cows. You sell all
    three cows to a Cayman Islands
    company. Using a letter of credit
    obtained from your brother-in-law
    at the bank, you buy back all four
     cows with an option on a fifth.
      The company Balance Sheet
     shows that you have six cows.
6
The American Corporation

    You have two cows. You sell one.
    You make the other one produce
     the milk of four cows. You then
    pay a management consultant to
     tell you why your cow has died!


7
The French Corporation

     You have two cows. You go on
     strike. You blockade the roads.
    You set things on fire . . . because
           you want three cows.



8
The Italian Corporation

          You have two cows.
     You don’t know where they are.
    So you decide to go & have lunch.




9
The Swiss Corporation

     You have five thousand cows.
     None of them belong to you.
      You charge the owners for
            storing them!



10
The British Corporation


        You have two cows.
        They are both mad!




11
The Iraqi Corporation

        You have no cows. Everybody
     thinks you have two cows. So they
       drop bombs on you and invade.
       You still have no cows, but you
           are now a democracy!


12
The Greek Corporation

        You have two cows which you
     borrowed from a French bank and
         a German bank. You eat the
       cows. When the banks come to
     collect the milk you turn to the IMF
        for help. You borrow two more
      cows. You eat the two new cows!
      When the IMF comes for the milk
           you go and get a haircut.
13
The Good Start Up

      Cashless Cash




14
The Good Start Up

         PayPal 2




15
The Good Start Up




16
Bottle Rocket




17
The Bad Start Up

        The one that doesn’t pivot!

        19 out of 20 start ups fail!

     What makes the good ones good?



18
The Ugly Side to Start Ups




     What is a “qualifying” trade?
19
Enterprise Investment Scheme

     Staff                 < 50

     Assets                < £15M

     Investor tax relief   30% of cost

     CGT on disposal       0% on gain

     Negligible value?     Up to 50% of loss
20
Seed EIS

     Staff                 < 25

     Assets                < £200K

     Investor tax relief   50% of cost

     CGT on disposal       0% on gain

     Negligible value?     Up to 50% of loss
21
R&D Tax Credits

     • Going concern
     • Stand alone – in profit
     • Min £10K spend
     • Scientific or Technical innovation



22
R&D Tax Credits

     • 225% tax relief
     • That means “up your tax rate”
     • 20% x 225% = 45%
     • Or a cash repayment of 24.75%



23
R&D Tax Credits


     What is “innovation”?




24
Pivot


     It’s not the idea!

      It’s the team!



25
Pivot

      “The Lean Start Up”
           Eric Ries

     “From Good To Great”
          Jim Collins

26
I’m not leaving you, I’m pivoting to another man.

27

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Start Ups, The Good, The Bad and The Ugly

  • 1. Start Ups The Good, The Bad & The Ugly @ProactivePaul 9 Mar 2013 1
  • 2. Socialism You have two cows. You give one to your neighbour. 2
  • 3. Communism You have two cows. The government takes them both and gives you the milk. 3
  • 4. Fascism You have two cows. The government takes them both and sells you the milk. 4
  • 5. Capitalism You have two cows. You sell one and buy a bull. You retire happily on the earnings from your farm. 5
  • 6. Venture Capitalism You have two cows. You sell all three cows to a Cayman Islands company. Using a letter of credit obtained from your brother-in-law at the bank, you buy back all four cows with an option on a fifth. The company Balance Sheet shows that you have six cows. 6
  • 7. The American Corporation You have two cows. You sell one. You make the other one produce the milk of four cows. You then pay a management consultant to tell you why your cow has died! 7
  • 8. The French Corporation You have two cows. You go on strike. You blockade the roads. You set things on fire . . . because you want three cows. 8
  • 9. The Italian Corporation You have two cows. You don’t know where they are. So you decide to go & have lunch. 9
  • 10. The Swiss Corporation You have five thousand cows. None of them belong to you. You charge the owners for storing them! 10
  • 11. The British Corporation You have two cows. They are both mad! 11
  • 12. The Iraqi Corporation You have no cows. Everybody thinks you have two cows. So they drop bombs on you and invade. You still have no cows, but you are now a democracy! 12
  • 13. The Greek Corporation You have two cows which you borrowed from a French bank and a German bank. You eat the cows. When the banks come to collect the milk you turn to the IMF for help. You borrow two more cows. You eat the two new cows! When the IMF comes for the milk you go and get a haircut. 13
  • 14. The Good Start Up Cashless Cash 14
  • 15. The Good Start Up PayPal 2 15
  • 16. The Good Start Up 16
  • 18. The Bad Start Up The one that doesn’t pivot! 19 out of 20 start ups fail! What makes the good ones good? 18
  • 19. The Ugly Side to Start Ups What is a “qualifying” trade? 19
  • 20. Enterprise Investment Scheme Staff < 50 Assets < £15M Investor tax relief 30% of cost CGT on disposal 0% on gain Negligible value? Up to 50% of loss 20
  • 21. Seed EIS Staff < 25 Assets < £200K Investor tax relief 50% of cost CGT on disposal 0% on gain Negligible value? Up to 50% of loss 21
  • 22. R&D Tax Credits • Going concern • Stand alone – in profit • Min £10K spend • Scientific or Technical innovation 22
  • 23. R&D Tax Credits • 225% tax relief • That means “up your tax rate” • 20% x 225% = 45% • Or a cash repayment of 24.75% 23
  • 24. R&D Tax Credits What is “innovation”? 24
  • 25. Pivot It’s not the idea! It’s the team! 25
  • 26. Pivot “The Lean Start Up” Eric Ries “From Good To Great” Jim Collins 26
  • 27. I’m not leaving you, I’m pivoting to another man. 27